The optimum brand extension strategy in monopolized target market

Brand extension, or the use of established brand name to enter new product category, is a very popular branding strategy. According to the quality model reflecting the vertical differentiation of the product, this article derived the optimum brand extension strategy pattern of the brand-extension firm in the monopolized target market. The result showed: It is not always the positive correlation between the brand lever force and the brand extension performance, but influenced by the target market type. Specifically,, there is inverse-U relationship between the brand lever force and the brand extension performance in the monopolized target market, not the monotonicity. Firms with the medium-sized brand lever force prefer to extend their brands to markets that are monopolized and maybe are "far" from their original product line. Other conclusions and lessons were also obtained from the model.